Austerity, Territorial Cohesion and Planning for Growth

The rumbling crisis in Greece (with Ireland, Spain, Portugal and even Italy waiting in the wings) raises fundamental questions about planning for growth. The EU’s Fifth Cohesion Report sketches some of the spatial parameters of the current crisis. It tells us that regions specialised in financial and business services have been “affected to an average extent in terms of the impact on GDP and employment”. This represents something of a success for the measures put together by governments in 2008 to save the banks.

I live in Edinburgh, home of the Royal Bank of Scotland whose rescue cost UK taxpayers a fortune, literally. I have been surprised at how well the city has weathered the storm. If the RBS and the Bank of Scotland had been allowed to go bust the city’s economy would have been devastated. Rates of closure of restaurants, hotels, shops and of course banks would have been far in excess of what they have been, and a huge corporate headquarters near the airport would have been mothballed.

So the taxpayers’ rescue package has had strong spatial impacts, not only at home, but across Europe. The main beneficiaries have been capital city regions or buoyant metropolitan regions, the home base of the financial and business services sector. In contrast, specialised manufacturing regions have been hit particularly hard. Meanwhile the highest increases in unemployment have been in regions that had become dependent on construction, associated with an unsustainable property boom (think Ireland’s “ghost estates”). There are important lessons here about planning for growth – as distinct to planning for boom and bust. Macro-economic policy and government spending substantially shape regional development.

Regions where tourism is strong and/or where the public sector is a large part of the economy have been less affected. The austerity measures now being enforced are likely to change that picture. Already, Latvia which made drastic cuts, has recorded very high rates of unemployment compared with other parts of Europe. So in very broad terms the pressure that is now being exerted to save those banks who stand to lose significantly from a Greek default, for example, are likely to further sustain the economies of capital city and metropolitan regions, while driving up unemployment and demolishing growth in economically weaker regions.

Territorial cohesion

This is, therefore, an opportune moment to ponder just what territorial cohesion now means. You may recall that it was written into the Lisbon Reform Treaties as a new aim of the EU. However, despite the Green Paper on Territorial Cohesion in 2008, just what territorial cohesion is remains cloudy. We are now in the run-in to the revision of Cohesion Policy for the period after 2013. Events mean that the review needs to focus on cohesion policy as a form of crisis management: the impacts of the crisis and the austerity measures will be imprinted on the map of Europe well beyond 2014. Oh, and there are issues with energy and climate change as well….

So the classic debates are emerging. Should all regions be eligible for cohesion funding – or only the most disadvantaged regions? The UK government favours the latter, but the scale of the economic crisis and the impacts of cuts could see escalation in the number of regions claiming to be at severe disadvantage. Then there is the question of “geographical specificities”. The statement on territorial cohesion in the Treaty links it explicitly to areas such as mountain regions, border areas, sparsely populated regions and islands. ESPON research has shown that many such regions share problems of poor accessibility: however, they are not uniformly poor regions, though there can also be sharp variations within such regions. In contrast to these largely rural regions, there is “the urban question”. Europe’s cities are fundamental to economic recovery and to social inclusion, yet they have never been so strongly to the fore in cohesion policy._

The Fifth Cohesion report says: “Urban problems, whether related to environmental degradation or to social exclusion, call for a specific response and for direct involvement of the level of government concerned. Accordingly, an ambitious urban agenda should be developed where financial resources are identified more clearly to address urban issues and urban authorities would play a stronger role in designing and implementing urban development strategies. Urban action, the related resources and the cities concerned should be clearly identified in the programming documents.”

In effect then we now have three parallel approaches to restoring growth in Europe. The finance ministers and the banks are prioritising deficit reduction and debt repayment through strongly deflationary policies. The European Commission is looking for “Smart, Sustainable and Inclusive Growth” in its Europe 2020 strategy. DG Regio is looking to revise cohesion policy as a vehicle through which to implement Europe 2020, but there are tensions between member states on what form cohesion policy should take. Meanwhile, everyone agrees that policy integration is a good thing and there should be more of it.

Planning for Growth

Some of these issues provide a backdrop to the conference that the RTPI is running in London on Friday 30 September. “Planning for Growth – What can we learn from Europe?” is part of the ESPON-INTERSTRAT project and is free to attend, and will feature discussions about what messages come from ESPON research that might feed into current debates about the planning system in England, and about the future work of the Local Enterprise Partnerships. Trudi Elliott, the RTPI’s Chief Executive trailed it in her article in “Planning” magazine last Friday. As well as featuring experts such as Michael Parkinson from Liverpool John Moores University, there will also be a panel discussion featuring practitioners and researchers from Germany, the Netherlands, Sweden and Slovenia. I will blog more about this event later in the week, as I will be one of the speakers; meantime, if you want to attend, please email This email address is being protected from spambots. You need JavaScript enabled to view it. as there are few places left.

The conference will be the climax of the UK’s ESPON Week. We have done a major update to the Powerpoint describing the work of ESPON, so that it covers what has been happening in the ESPON 2013 programme. The Powerpoint will be available for use by lecturers, students and practitioners who want a quick but thorough overview of what ESPON is and its links into the UK.